Hungarian Competition Authority - draft commitment guidelines published for consultation
The Hungarian Competition Authority (GVH) has published a draft of its new guidelines on commitments both for antitrust and unfair commercial practices cases. What are the main proposed changes?

1. Introduction

 

The GVH’s new draft guidelines on commitments (as available on the GVH’s website in Hungarian) (“Draft Guidelines”) reforms the previous guidelines in two main aspects: predictable procedure and clear conditions for approval.

 

Nevertheless, the most important change compared to the previous commitments guideline (issued in 2014; the “2014 Guidelines”) is that the proposed new commitment guidelines  is now fully applicable to antitrust cases, while the the 2014 Guideline only applied to consumer protection cases. Although at first sight this would appear to be a significant novelty, it is to be noted that that already under the current regime, the way  antitrust committments were managed was very much modeled on the 2014 Guidelines. As a result, the New Guidelines is more a formalisation of the GVH's jurisprudence in antitrust cases as opposed to a landmark change.

 

2. Predictable procedure

 

With the new guidelines, the GVH aims to clarify the conditions under which commitments can be accepted.

 

The Draft Guidelines stipulate, that, principle, commitments are to be submitted within the investigative phase of the proceedings (the GVH's proceedings is generally divided into two phases: the initial investigative phase and the the Competition Council phase, where (typically after the issueance of the statement of objections) the final decision is made). As an exception, the GVH reserved itself the power to suggest the submission of a commitment in a later stage of the investigation, i.e. even in the statement of objections.

 

The Draft Guidelines now also specifies a deadline for submitting a declaration of intent for proposing commitments (“the Intent”).  The Intent is not equal to the final commitment and rather only contains the broad framework for a future commitment to be made. The deadline for submission of the Intent is different for the two types of procedure: 120 days in antitrust cases and 60 days in consumer protection cases starting from the day of the order initiating the investigation. This period could be rather short as in antitrust cases, the party usually has only very little knowledge of the overall picture of the investigation at such an early stage (especially since the scope of the investigation may still substantively change afterwards with further investigative measures to be taken).

 

After submitting the Intent, it is examined by the GVH within 30 days. If the Intent is found to be suitable for being developed into a commitment, theH holds a hearing for the party, after which, within a rather short period (15 days) the party is to to submit a final statement of commitments. This is then further evaluated by the GVH and if its is accepted, the proceedings could be closed without a finding of an infringement and by making the commitments binding on the given party.

 

Once this is done, importantly, the GVH monitors the execution of the commitment: the GVH carries out post-commitment investigations, in which it reviews whether the undertaking has adhered to the commitments. Should the GVH establish a breach of the commitment, it has the power to withdraw the commitment and initiate competition proceedings once again.

 

3. Conditions for approval

 

The Draft Guidelines now propose to completely restructure the conditions for approval.

 

Specifically, in respect of antitrust infringements, there are certain types of infringements that are ab ovo not deemed to be acceptable: these include agreements/concerted practices among competitors (cartels), resale price maintenance cases (RPM) and in all other cases that fall under the so-called “hardcore” restrictions according to the EU Vertical Block Exemption Regulation. In addition, infringements which are deemed to the “particularly severe” cases of abuse of dominant position may only benefit from a commitment procedure under exceptional circumstances (similarly, serious consumer protection infringements or serious/repetitive breaches of antitrust law may only benefit from a commitment in exceptional cases).

 

In terms of positive assessment, in general, commitments may only be accepted if they fulfil the following criteria:

 

  • Relevant: The commitment has to remedy explicitly the competition concerns raised by the GVH. The GVH prefers commitments which target the core reason of the infringement and not only its effects. A relevant commitment has to go beyond legal obligations and has to ensure the protection of public interest. The NCG also list several examples which the GVH deems to be fulfilling of the condition of relevance.
  • Credible: In terms of credibility, the GVH requires the undertaking to adhere to commitment which are realistically feasible. The undertaking has to give a detailed plan on how it plans to realize the commitment (e.g. by what means, what kind of budget is required, etc.)
  • Right in timing: The undertaking has to state the timeframe within it can introduce the commitment, for how long it is going to uphold the commitment and an estimate for the commitment to take effect on the market and within the undertaking as well.
  • Discrepancy-free: The wording of the commitment may not leave room for future interpretation.
  • Verifiable:  The undertaking has to hand in a detailed plan as to how it proposes to prove the realization of the commitment to the GVH (e.g. via regular reports, appointment of an independent monitoring trustee).
  • Contains business secrets only in exceptional cases: As a principle, the GVH's decision obliges the party to publish the commitment and thus the inclusion of business secrets would impede the GVH from ordering this.

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